Masco Corporation - Free Essay Example

Bottom of Form Masco Corporation Address: 21001 Van Born Road Taylor, Michigan 48180 U. S. A. Telephone: (313) 274-7400 Fax: (313) 374-6135 https://www. masco. com Statistics: Public Company Incorporated: 1929 as Masco Screw Products Company Employees: 42,500 Sales: $6. 3 billion (1999) Stock Exchanges: New York Ticker Symbol: MAS NAIC: 33711 Wood Kitchen Cabinet and Countertop Manufacturing; 326199 All Other Plastics Product Manufacturing; 33251 Hardware Manufacturing; 332913 Plumbing Fixture Fitting and Trim Manufacturing Company Perspectives: By leveraging on our collective strengths, by more effectively combining entrepreneurship and professional management, and by combining our historically successful sales and marketing programs with new cost-reduction, technology, logistics and other initiatives, we are determined to regain our image as a premier growth company with operating returns unmatched in our industry. By building a new Masco on the best of the old, it is ou r intent to once again achieve a record of performance that should result in the restoration of the premium common share valuation that we enjoyed for many years. We are confident that our strategies are sound, that our people throughout the organization are committed to enhancing shareholder value, and that we have the broadest offering of quality leadership products available in the markets that we serve. Key Dates: 1920: Alex Manoogian immigrates to the United States. 1929: Masco Screw Products Company is formed. 1937: Masco begins selling shares on the Detroit Stock Exchange. 1954: Masco launches the Delta Faucet. 1961: Masco acquires Peerless Industries, Inc. 1968: Richard Manoogian becomes company president. 1984: Masco Industries Inc. is formed. 993: Masco Industries becomes MascoTech Inc. 1996: Masco sells furniture unit to Furnishings International, Inc. 2000: Masco sells remaining interest in MascoTech to Heartland Industrial. Company History: Masco Corporation is the w orlds largest faucet manufacturer as well as the leading U. S. cabinet manufacturer. The company manufactures hundreds of building specialty and home improvement products, including kitchen appliances, whirlpools and spas, bath and shower tubs and enclosures, residential and commercial locks and hardware, venting systems and ventilating products, electrical outlet boxes, and water pumps. Masco Corporations best-known product is the single-handled Delta faucet, developed and promoted in the 1950s by the companys founder, Alex Manoogian. Mascos 20 lines and 250 styles of cabinets include stock, semi-custom, and custom cabinetry for the replacement/remodeling and new construction markets. Origins as a Screw Machine Business in 1929 In 1920 Alex Manoogian, at the age of 19, immigrated to the United States from Smyrna, Turkey, fleeing political persecution and danger that threatened him as a Christian Armenian in Moslem Turkey. After holding several odd jobs in Bridgeport, Connecti cut, including brief employment in a screw machine business, Manoogian came in 1924 to Detroit, Michigan, where he worked in a screw machine business and learned about metalworking for automobile components. In 1929, six weeks after the stock market crash, he founded Masco Screw Products Company with two partners, Harry Adjemian and Charles Saunders, who left during the first year. They began with a few thousand dollars, several used screw machines, and a truckless than $33,000 in assets. Masco was derived from the first letters of the partners last names plus co for company. The automobile industry was still young and largely untested, and Mascos initial years were difficult. Hudson Motor Car Company was the first customer, with a $7,000 contract, but Masco could not yet afford to pay salaries. Manoogian was sales manager, estimator, foreman, press operator, and repairman. The first plant was located on the fifth floor of an old building, with a furniture manufacturer on the floor below. Soon after business began, oil from the Masco machines leaked through the floor, ruining newly upholstered furniture. Manoogian was able to remain in business by arranging extended payments for the furniture damage. During the 1930s, Masco worked mainly with Chrysler and had contracts with Ford, Graham Page, Spicer Manufacturing, and Budd Wheel. Since Masco produced parts to the specifications of these firms, the company did not distinguish itself through product design and, instead, focused on providing excellent service. In 1931 Manoogian brought his family to the United States and married Marie Tatian. In 1934 his brother Charles joined the company, followed a few years later by another brother, George. By 1936, all sales were to the automotive industry and had increased almost fourfold since the first year, to $234,000. In 1937, Masco went public, its shares selling for $1 on the Detroit Stock Exchange. Later in 1937, the plant caught fire. Fortunately, snow that ha d accumulated on the roof of the building melted and poured over the heavy machinery, reducing the fires damage. Although Masco was in business again three months later, this was the one year in its history when the company lost money. Like most U. S. metalworking companies during World War II, Masco worked exclusively for the defense industry. In 1942, its sales reached $1 million and continued to increase for two years. When the war ended in 1945, sales declined as Masco returned to manufacturing for the automotive industry, and three years later, Masco offered more stock to the public. The sale of 13,000 shares generated the capital to buy the Ford Road Plant in Dearborn, Michigan, which then became the company headquarters. In 1950, just after the Korean War began, Masco resumed production for the defense industry. Although sales increased, profits remained flat, due to the payment of wartime excess-profits taxes. Masco began work on a new kind of artillery-shell timing me chanism, a precision-made part that demonstrated the companys expertise in metalworking. Chrysler asked Masco to bid on a contract that required a new metalworking technique called cold extrusion, one unfamiliar to Masco engineers. Soon the company was producing satisfactory parts by cold extrusion. In 1953, when wartime contracts ended, Masco could not afford to continue developing the new technology and did not resume using cold extrusion until 1967. The Launch of Delta Faucet in 1954 Proves Pivotal The year 1954 was a turning point for the company when Alex Manoogian won a small contract to manufacture parts for a new type of faucet being produced in California. At the time, Masco was still an automotive parts manufacturer with little experience in plumbing fixtures. The unusual design of this faucet was its single handle, which controlled both cold and hot water. Unfortunately, the faucet, nicknamed by plumbers the one-armed bandit, did not operate properly, and orders for it ceased. Because of his metalworking expertise, Manoogian detected the deficiencies in the faucet and redesigned it. He paid the original owners for licensing rights to produce and market his own version. At first, he formed a separate company to protect Masco if the new faucet did not sell. He tried to interest plumbing manufacturers in marketing the faucet, but they claimed there was no market for it. Eventually, Manoogian transferred the rights to Masco, which produced and marketed the Delta faucet. Sales increased rapidly, topping $1 million by 1958. In 1959 Masco bought a separate plant in Greensburg, Indiana for faucet manufacturing. That year also, Manoogians son, Richard, graduated from Yale University and helped launch the new faucet operation. From the beginning of his career, Richard Manoogian led the company toward expansion. He engineered Mascos first major acquisition in 1961, that of Peerless Industries, Inc. , a manufacturer of plumbing products, to widen Masco s production capabilities. In the same year, Masco closed its Dearborn plant and moved automotive parts production to Ypsilanti, Michigan. The faucet sector, which continued with steady success, offset the cyclical nature of the automotive industry. By 1962, Delta faucet sales reached $7 million and accounted for more than half of Mascos sales. By then, Masco Screw Products Company was an inappropriate name for a supplier to both the automotive and construction industries and the name was changed to Masco Corporation. In 1962, Masco acquired Mascon Toy Company, a manufacturer of toy telephones and play furniture, but Mascon was sold in the late 1960s, because of its low profit margins and its incompatibility with Mascos other interests. Later in 1962, Masco was placed on the American Stock Exchange, and Smith Barney, the investment banking firm, accepted Masco as a client, opening new sources of financing. Masco began an aggressive plan of acquisition and diversification spear headed by Richard Manoogian. In 1962 Masco acquired Steel Stamping Company, and in 1964 it acquired Nile Faucet Corporation, broadening its capabilities in the automotive and plumbing parts sectors. Over the next few years, as the construction industry flourished, the company began to expand its product line, acquiring Auto-Flo Company and Auto-Flo Corporation, which produced air-handlers, such as ventilators, and furnaces, and Gibbs Automatic Molding Company, a plastics firm. Masco headquarters moved in 1967 to new facilities in Taylor, Michigan. The company began using the technique of cold extrusion, a process that resulted in greater structural strength and improved energy efficiency. In 1968, Masco acquired the Burns Companies, which manufactured components by cold forging and by automatic screw machines, followed by a series of acquisitions in the metalworking industry throughout 1970, including Punchcraft, Inc. , Molloy Manufacturing Company, Century Tool Company, Keo Cutt ers, Inc. , and Commonwealth Industries. In 1968 Richard Manoogian was made president of Masco, and Alex Manoogian became chairman of the board. Masco had become a major manufacturer of plumbing products for the kitchen and bathroom, with sales of $5. 5 million. In 1969, Masco was listed on the New York Stock Exchange. Acquisitions Continue in the 1970s and 1980s During the 1970s, Mascos two main markets, the automobile industry and the construction industry, fared badly in the countrys recession. American automobile companies faced increasing foreign competition. Inflation and high interest rates caused a 34 percent decline in the number of new homes by 1974. Nevertheless, Masco earnings continued to grow at an average of 20 ercent per year. Masco had become the leading supplier of many household items, and it continued to diversify. Plumbing products for do-it-yourself home improvement continued to do especially well, and renovation and replacement accounted for more than half of Mascos faucet sales by 1975. In 1972 Masco began to market a new faucet design, a double-handled faucet called the Delex, based on the same rotating-ball principle as the Delta. Masco continued to introduce new models over the next few years, and by 1975 had increased its market share to 22 percent. In 1971 Masco entered the communications business when it acquired Electra Corporation, which manufactured scanning monitor radios. That year Masco began to manufacture parts for trailers and other recreational vehicles with its purchase of Fulton Company in 1971 and Reese Products in 1973. In 1972 Masco bought several small manufacturing companies for its automobile sector, and in 1973 it bought American Metals Corporation. In 1973 Masco made its first foreign acquisition with Holzer and Company, a West German manufacturer of air-handlers. That same year, Masco entered the petroleum equipment sector, acquiring 47 percent of Emco, a Canadian manufacturer of oil pipes and plumbin g hardware. Foreign sales in 1973 accounted for four percent of the companys total, increasing one year later to seven percent. Between 1973 and 1974, when the automobile and construction industries hit their worst slump of the decade, Mascos stock value plummeted from 46 times earnings to a multiple of 20, although sales were up 23 percent and earnings were up 22 percent. In 1975, Manoogian took advantage of the growing market for citizens band (CB) radios and acquired Royce Electronics. CB sales continued to soar at the beginning of 1976, but, by the end of the year, the supply of CBs exceeded demand. When the federal government expanded the available channels from 23 to 40, the 23-channel radios became virtually obsolete. Royces sales plummeted from $53 million to $17 million, and the company suffered $1 million in losses. Masco sold 51 percent of Royce in 1976 and its remaining shares in 1977. Nevertheless, the company remained in the communications sector. Electra continued to make scanning monitor radios and other electronic products. In 1976 Masco sued RCA Corporation, Teaberry Electronics Corporation, and Sanyo Electric Company for infringing on Electras patents for scanning radio receivers. Sanyo produced the radios in Japan for the other two companies, but Masco required that firms sign a licensing agreement to sell the scanners. The case was settled in court when Sanyo agreed to pay Electra royalties under a new licensing agreement. Masco continued to penetrate the petroleum equipment market in 1976, acquiring A-Z International Companies and Grant Oil Tool Company, both manufacturers of drilling tools, as well as Dansk Metal and Armaturindistri of Denmark. Masco also created Forming Technology Company, a firm with technologically advanced equipment that produced larger metal components swiftly and economically. In 1977, Masco acquired Walker McDonald Manufacturing Company and R ; B Manufacturing Company, producers of petroleum equipment, an d, in 1978, Rieke Corporation, which made closures for oil drums and other large containers. In 1979 Masco purchased Jung-Pumpen, a West German maker of sump pumps, and Arrow Specialty Company, a maker of engines and engine repair parts. During the late 1970s, Masco began to advertise its faucets on network television. In a March 16, 1981 interview with Forbes, Richard Manoogian stated, Everybody thought we were crazy. They told us that the only time you buy a faucet is when your old one leaks. Masco realized that there was a steady consumer demand for the product and continued to expand its line of faucets. By 1980, Masco had increased its market share to 28 percent. In 1980, while automobile production slowed 24 percent, Masco worked with car manufacturers on design, to create additional car parts. In 1981, while the housing industry was in its worst state since the mid-1970s, Mascos sales in that sector continued to grow. Mascos products in the home improvement area were not subject to extreme economic swings, and the home improvement sector was growing faster than the industrial one. Masco continued to expand in 1980, acquiring AlupKompressorenPressorun, a West German maker of air-compressors, Lamons Metal Gasket Company, and Arrow Oil Tools, a manufacturer for the petroleum industry. In 1981 Masco introduced a nonceramic toilet, which used much less water and was insulated to muffle the sound of flushing. Diversification continued in 1982. Masco acquired two small companies that made valves and related products for the oil industry, as well as Evans-Aristocrat Industries, which made steel measuring tapes. That same year it also purchased Baldwin Hardware Manufacturing Company, which made hardware for builders, and Marvel Metal Products, manufacturer of steel work stations for the office. The year 1982 was the first since 1956 that earnings for operations did not increase, because of the effects of the recession. Mascos sales in the cold extrusi on industry declined 17 percent, primarily because of the depressed automobile and construction industries. In 1983 Masco acquired Brass Craft Manufacturing Company, a maker of plumbing supplies. Building and home improvement product sales were up more than 50 percent to $500 million, because of profitable acquisitions and steady faucet sales. At the same time, decline in oil prices spurred a drop in petroleum equipment sales. Industrial Businesses Spin-Off in 1984 For many years, the cyclical industrial sectorspetroleum and construction equipment and automobile partshad lowered Mascos overall yearly results, even though total annual sales had continued to grow. In 1984 Richard Manoogian spun off Mascos industrial businesses into a separate, publicly held company, Masco Industries Inc. (MI). This change gave Masco Corporation a firmer identity as a home improvement and building products company, enabling it to focus on that sector. While the move allowed both companies to expa nd more quickly, it also gave Masco Corporation continued access to MIs metalworking technology. Richard Manoogian became CEO of the new company, and its headquarters remained in Taylor, Michigan, with Masco Corporation. Masco Corporation distributed 50 percent of MI stock to shareholders as a dividend and retained the other half, worth about $50 million. A year later, Masco ownership of MI decreased to 44 percent. In the restructuring, the two companies formed Nimas Corporation as a vehicle to facilitate Mascos leveraged buyout of NI Industries, a large diversified company. NI Industries manufactured many building products, including Thermador cooking equipment, Weiser locks, Waste King appliances, Artistic Brass faucets, and Bowers electrical outlet boxes (Mascos first entry into the electrical equipment business). NI also produced several automobile and defense products. Masco paid $483 million for the company; using Nimas allowed Masco Corporation and MI to make an expensi ve acquisition without placing the debt on either companys balance sheet. During the next few years, MI focused on developing its manufacturing technology and expanding through acquisitions, investing more than $1 billion. As a result, yearly earnings suffered, although sales increased from $545 million in 1984 to $1. 7 billion in 1989. Erwin H. Billig became president of Masco Industries in 1986. Between 1986 and 1989, MI diversified into architectural products, acquiring manufacturers of steel doors, door frames, metal office panels, security grills, sectional and rolling doors, and similar items. By 1989, it had become one of the largest U. S. producers of steel door products. MI also entered a new sector of automotive parts in 1986, acquiring several manufacturers of components such as windshield wiper blades, roof racks, brake hardware repair kits, and front-wheel-drive components. MI focused on establishing its own niches in the market, which continued to expand as the n eed for replacement parts for longer lasting automobiles increased. MI production of customized goods for the defense industry, including cartridge casings, projectiles, and casings for rocket motors and missiles, declined in the late 1980s, as the U. S. government began to decrease defense spending. After the creation of MI, Masco Corporation continued its expansion, acquiring, in 1984, Trayco and Aqua Glass, both kitchen-and-bathroom-products manufacturers with sales of about $70 million. At the same time, Masco phased out its Electra personal communications products, a market no longer suited to the companys criteria for growth. In 1985 Masco acquired Merillat Industries, a manufacturer of cabinets, and Flint and Walling Water Systems, which made water pumps. Masco also introduced the largest faucet selection in the history of the plumbing industry. Wayne B. Lyon became president of Masco in 1985, and Richard Manoogian served as chairman and CEO of both Masco Corporation and M asco Industries. In the early 1980s, Richard Manoogian saw a great potential for growth abroad and acquired the Berglen group of companies, which distributed faucets in the United Kingdom, and 25 percent of Hans Grohe, the top European hand-shower manufacturer. Because of disadvantageous foreign currency rates, sales in dollars in Europe had remained stagnant for several years, but European sales in domestic currencies were thriving. In 1986 Masco filed lawsuits against several plumbing suppliersWaxman Industries, Keystone Franklin, and Radiator Specialty Companyfor infringement on the Delta faucet trademark. The following year, Mascos competitors agreed to mark packages more clearly, following the trademark specifications. It was the first of several trademark infringement cases involving the Delta name. Expanding into Furniture in the Late 1980s Masco moved into the furniture industry in 1986, acquiring Henredon Furniture Industries and Drexel Heritage Furniture and, one yea r later, Lexington Furniture Industries. The three companies represented about $700 million in sales. Masco also acquired Walkins Manufacturing Corporation, a producer of spas, and Fieldstone Cabinetry. In 1987 Masco purchased Marbro Lamp Company and Hueppe Duscha, a West German maker of shower equipment. Masco also issued 1. 2 million shares to finance its acquisition of La Barge Mirrors; two new furniture companies, Hickorycraft and Alsons Corporation; and Marge Carson, Inc. , a manufacturer of plumbing products. By 1988 furniture sales accounted for about 25 percent of the companys $2. 9 billion sales, and Masco continued to expand, acquiring American Textile Company and the Robert Allen Companies. In 1988, MI transferred nine of its smaller businesses to TriMas Corporation, a publicly traded spin-off, primarily a manufacturer of industrial fasteners. Two years later, Masco Corporation sold TriMas its recreational vehicle accessories and its insulation products businesses. Initially, Masco held a 19 percent (by the mid-1990s reduced to four percent) stake in TriMas, and MI held a 48 percent stake (by the mid-1990s 37 percent). In 1989 earnings declined, and Masco Corporations stock sold at discounted rates, due to investor uncertainty about the future of the home improvement sector. Consequently, the company repurchased four million of its common shares in 1989, and, in 1990, the board voted to repurchase up to ten million additional common shares. Expansion continued in 1989, as Masco bought Universal Furniture of Hong Kong, its largest overseas acquisition. Foreign sales, mainly in Canada and Europe, accounted for about 13 percent of Mascos total revenues. In 1990 Masco bolstered its cabinetry operations through the acquisition of KraftMaid Cabinetry, Inc. Refocusing on Home Improvement and Building Products in the 1990s Mascos move into furniture turned out to be a major mistake. Part of the problem was bad timing, as the furniture industry i n 1988 entered into a deep recession, which it did not pull out of until 1992. However, furniture also simply turned out to be a bad fit for Masco, unlike the companys move into cabinetry, a product sector that was much more closely aligned to such Masco mainstays as faucets than furniture was. Following its move into cabinet making, Masco had been able to achieve manufacturing efficiencies, thus improving upon the businesses it acquired; furniture manufacturing, however, as less sophisticated and thus did not lend itself to the kinds of management techniques Masco typically used. Furthermore, Masco had great difficulty marketing its furniture lines, whereas it had been able to sell its cabinets through many of its existing channels. By the early 1990s the companys furniture group was a major drag on company earnings. Despite this, Masco continued to increase its investment in furniture by making additional acquisitions, including the mid-1994 purchase of Berkline Corp. a Tennessee- based maker of recliners and upholstered family room furniture that had sales of $165 million in 1993. Meanwhile, Masco also felt the effects from a troubled Masco Industries, which was suffering from the effects of the early 1990s recession, a downturn that hit the auto industry particularly hard. Prospects had improved by 1993 thanks to a restructuring and an improving economy and Masco took advantage of MIs stronger position by reducing its stake in its sister company that year to 35 percent. Also in 1993, MI changed its name to MascoTech Inc. By 1997 Masco Corporation had further simplified its holdings by reducing its MascoTech stake to 17 percent, with the prospect of completely eliminating this noncore holding by the turn of the century. An even more important divestment occurred in 1996 when Masco sold its furniture unit. In June of the previous year, the company had decided to sell the unit, finally concluding that it would be unable to turn the unit around and that it w ould be best for Masco Corporation to return to an exclusive focus on home improvement and building products. Masco had been unable to increase the furniture units operating profits, which had ranged from three to six percent, nowhere near the 15 to 20 percent generated by the companys other operating units. In November 1995 Masco announced that Morgan Stanley Capital Partners would buy the furniture unit for nearly $1. 2 billion, but in January of the following year the deal was abandoned without explanation. Then, in August 1996, Masco sold the troubled unit to an investment group, Furnishings International Inc. , with proceeds exceeding $1 billion, $708 million of which was cash. As part of the agreement, Masco gained a 15 percent stake in Furnishings International. Masco soon used a large portion;mdashout $550 millionof the cash it gained to reduce its long-term debt, which had been fairly high. Following its abandonment of furniture, Masco made several acquisitions that e xtended its existing products lines in brand-name and geographic terms. In 1996 three European companies with combined 1995 sales of $140 million were acquired: The Moore Group Ltd. , a leading U. K. maker of kitchen cabinets; Horst Breuer GmbH, a German manufacturer of shower enclosures for the do-it-yourself market; and E. Missel GmbH, a leading German manufacturer of proprietary specialty products for the new construction, remodeling, and renovation markets. In March 1997 Masco acquired Franklin Brass Manufacturing Company, a California-based maker of bath accessories and bath safety products, and LaGard Inc. , another California company, which was an electronic lock manufacturer. Later in 1997 two more cabinetry companies were acquired: Liberty Hardware Manufacturing Corporation of Boca Raton, Florida, a maker of cabinet hardware; and Texwood Industries, Inc. a leading maker of kitchen and bath cabinetry based in Duncanville, Texas. Masco expanded further outside the United S tates in July 1997 when it acquired The Alvic Group, a leading Spanish manufacturer and distributor of kitchen and bath cabinetry, and The SKS Group, a leading German maker and distributor of roller shutters and aluminum balcony railing systems. As the new century approached, with its ill-fated furniture adventure more or less behind it and its holding in MascoTech substantially reduced, Masco Corporation appeared ready to reclaim some of its past glory. Newly committed to its core home improvement and building products businesses, the company was likely to continue to seek out targeted acquisitions both at home and abroad to strengthen its already commanding position. Heading into the 21st Century In 1997 one of Mascos lesser known subsidiaries emerged as a major source of revenue for the corporation. Considered a minor acquisition when it was obtained in 1994, Vapor Technologies Inc. assumed a more prominent role in company operations in 1995 with the release of Brilliance, an anti-tarnish and anti-rust metal finish. By 1997 Masco was applying the innovative finish to a number of its faucets and locks. The financial results were impressive, as faucet sales rose from $757 million in 1996 to over $900 million in 1997; the following year, Masco announced plans to expand its line of Brilliance faucets from 60 models to 2,000. The company also began exploring the possibility of wider applications for Brilliance, and use of the versatile finish on light fixtures, lamps, and other brass furnishings eventually helped boost sales of Mascos brass products by 300 per cent. Overall the company enjoyed record profits for 1997, with net income reaching $382. 4 million, compared to $295. 2 million in 1996. A number of key overseas acquisitions in 1998 helped bolster the companys share of the European home furnishings market. In March Masco acquired Vasco Corporation, a Belgian manufacturer of hydronic radiators and heat convectors, key components of heating system s in the majority of European homes. A similar manufacturer, Brugman Radiatorenfabriek B. V. in Holland, was purchased in July, and in November the company acquired the British bath fixture company Heritage Bathrooms. During this period the company also made an effort to establish a stronger niche in the Japanese home furnishings market, establishing Masco Japan Ltd. in February 1998. The Japanese market showed significant room for growth, with over a million new houses being built annually, and a faucet, cabinet, and lock market estimated at $7. 2 billion. In the midst of these new ventures Masco sold its Thermador subsidiary to Bosch-Siemens in June, signaling the companys formal exit from the appliance manufacturing business. The year 1998 again brought record earnings, with net profits exceeding $475 million. In 1999 the company embarked on a major acquisition campaign, beginning in March, when it purchased Spanish household and kitchen equipment manufacturer GMU. A series of key acquisitions came in April, with Faucet Queen, Inc. , A ; J Gummers, The Cary Group, and Avocet Hardware (U. K. ) entering the Masco fold. Masco completed its largest purchase in September, when it acquired five companies with combined yearly sales of over $1. 5 billion. The companieswhich included Arrow Fastener Company, Behr Process Corporation, Inrecon, Mills Pride, and Superia Radiatoren N. V. of Belgiumexpanded Mascos role as a major supplier to Home Depot, and business with the home furnishings chain was expected to rise from $500 million in 1998 to $1. 5 billion in 2000. In May 1999 Masco also entered into a strategic alliance with Pulte Corporation, which made Masco subsidiaries Merillat Industries and Quality Cabinets the primary cabinet suppliers for the homebuilder through 2002. While the company continued to enjoy record profits in 1999, with net earnings nearly reaching $700 million, a decline in the home furnishings business was approaching. A combination of decreased sales and high energy costs resulted in low share value for the companys stock, and profits for 2000 and 2001 were expected to be lower than previously projected. The company was also hit by unfavorable exchange rates during this period, with a strong U. S. dollar resulting in lower international earnings. In an effort to phase out its less profitable holdings, in August 2000 the company sold its remaining interests in MascoTech to Heartland Industrial for $2 billion. In general, however, the slight economic slump not deter the company from continuing to pursue its aggressive acquisition strategy. In January 2000 Masco acquired Danish firm Tvilium-Scanbirk, a leading manufacturer of ready-to-assemble shelving, cabinetry, and other furniture products in Europe, and a major supplier for Staples. In May the company acquired Masterchem Industries, a specialty paint products company, and Glass Idromassaggio, an Italian manufacturer of bathtubs, shower enclosures, and whi rlpools; in November it purchased BSI Holdings and Davenport Insulation. While Mascos profits for 2000 may not have topped the $700 million mark, as it forged ahead into the new century the company could still boast a significant share of the home furnishings market. Principal Subsidiaries: A ; J Gummers, Ltd. (U. K. ); Alfred Reinecke GmbH ; Co. KG (Germany); Alma Kuchen Aloys Meyer GmbH ; Co. (Germany); Alsons Corporation; The Alvic Group (Spain); American Metal Products; American Shower ; Bath Corporation; Aqua Glass Corporation; Arrow Fastener Company; Avocet Hardware, plc (U. K. ); Baldwin Hardware Corp. ; Behr Process Corporation; Berglen Group, Ltd. (U. K. ); Brass Craft Mfg. Company; Brugman Radiatorenfabriek B. V. (Holland); BSI Holdings, Inc. ; The Cary Group; Cobra Products, Inc. ; Computerized Security Systems; Damixa A/S (Denmark); Davenport Insulation; Delta Faucet Co. E. Missel GmbH (Germany); Faucet Queen; Fieldstone Cabinetry, Inc. ; Franklin Brass Mfg. Co. ; Gal e Industries, Inc. ; Gamco (General Accessories MFG. Co. ); Gebhardt Ventilatoren GmbH ; Co. (Germany); Ginger; Glass Idromassaggio S. p. A. (Italy); GMU-XEY (Spain); Grumal (Spain); Heritage Bathrooms, PLC (U. K. ); Horst Breuer GmbH ; Co. (Germany); Huppe GmbH ; Co. (Germany); Inrecon, L. L. C. ; Jung Pumpen GmbH ; Co. (Germany); KraftMaid Cabinetry Inc. ; La Gard, Inc. ; Liberty Hardware; The Marvel Group; Masterchem Industries, Inc. ; Melard Manufacturing Corp. ; Merillat Industries, Inc. Mills Pride; Mirolin Industries Corporation; Moores Furniture Group Ltd. (U. K. ); Newteam Limited (U. K. ); Peerless Faucet Company; Rubinetterie Mariani S. p. A. (Italy); SKS (Stakusit Bautechnik GmbH) (Germany); StarMark, Inc. ; S. T. S. R. (Italy); Superia Radiatoren, NN (Belgium); Texwood Industries, L. P. ; Tvilum-Scanbirk A/S (Denmark); Vapor Technologies Inc. ; Vasco plc (Belgium); Watkins Manufacturing Corporation; W/C Technology Corporation; Weiser Lock, Inc. ; Zenith Products Corpora tion. Principal Competitors: American Standard Companies Inc. ; Fortune Brands, Inc. ; U. S. Industries, Inc.